Loss of Profit Insurance What and why are the coverage?

Published September 11, 2017July 29, 2017 by Jamin

Loss of Profit Insurance What and why are the coverage?

The Loss of Profits policy covers the monetary loss occurring from a break in a business activity arising due to the physical loss of property by an event covered by insurance.

What is the coverage?

In general term, the Policy broadly covers loss of Gross Profit for business interruption, consequent upon Material Damage to property due to Fire or any other insured peril under the Standard Fire and Special Perils Policy.
It also covers standing charges which continue incurring during the interruption thereby increasing the working cost necessarily and reasonably incurred to support the business to its formal activity. Consequently, therefore, that loss under net profit and standing charges can avoid or mitigate.

It also covers standing charges which continue incurring during the interruption thereby increasing the working cost necessarily and reasonably incurred to support the business to its formal activity. Consequently, therefore, that loss under net profit and standing charges can avoid or mitigate.

An eye-opening for the bewilderment insured during the closed-door discussion between me, and insured’s finance controller.

Why need to cover the loss of profit insurance?

“Boss, by having fire insurance is not a perfect shield for your business empire, a complimentary policy utmost important for your factory with a workforce of closed a thousand. Let me introduce the Loss of Profit Insurance” I announced.

“What is that? Such policy exists?” they questioned me with their disbelief eye.

” Your factory premises and machinery all under financed with a local bank, a short-circuit would curtail the production flow, subsequently a reduction turnover, How shall you keep the monthly installment repayment to the bank in addition to ongoing costs like staff salary utility bills, lease payments or advertising. The board of Director and the top management lives on fresh air and the sunshine with dwindling in bank cash flow?

The owner and the finance controller trying to fob off me, “We really don’t need this kind of policy.”

Increase working cost

“Well, having some oversea buyers with the confirmed letter of credit at sight, can you offend your buyer by postponed shipment date? If so, how many times, is there no late penalty and your goodwill and credit-worthiness could restore when it tarnished. This policy would solve this temporary relocation cost and the rental cost to compile with the shipment date. Pouring salt on the wound, some supplier would inflate your buying cost price besides the logistics cost. Your creditor adds fuel to fire, giving a shorter credit payment term. The maxim goes, misfortune always knock twice”

“The bank would close their umbrella during this trying time, and seek for a reduction of capital-outlay to your factory when the building blaze to the ground, coupling with these 2 events, Can you cope with it?”

The following clauses are the extension of the Standard Policy for Loss of Profit Insurance.

Free of Charge Clauses:-

Denial of Access/adjoining Premises risk.
Alternative Indices.
Waiver of Material damage proviso.
Payment of account – cash call*.
Premium Payment.

Payment Clauses.

Supplier’s and Customer’s premises.
Upward adjustment Clauses 25%.
Failure of supply from public utilities at least 48 hours.
Accumulation of Stock.
Department Clauses.
New Business for 1st year only.
Salvage sales.

*Payment of account: The beauty of this policy when an insured peril occurs, the insured can evoke by asking insurer for advanced payment at least 50% of the sum insured within 14 days’ notice without incurring any interest charges prior to finalize a report provided that it is a genuine claim.

How to derive adequate sum insured for Loss of profit Insurance will roll out soon?

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Loss of Profit insurance why agent shy away

Published September 10, 2017July 29, 2017 by jamin

Loss of Profit insurance why agent shy away?

The Loss of profit insurance sounds an alien phrase to the majority of the agent, nevertheless, it brings a profitable for an underwriting profit for the year-end. Despite the fact it is a complementary policy to the fire insurance for the existing client, the agent silence on this as if it is a taboo subject to even those veterans. Stumbling across an agent serving an insured for the past 2 decades, never raise the issue on this loss of profit insurance. Consequently, he would out of business for the following year, when a knowledgeable, armed competitor edged over the business.

Industrious to learn this subject, without the Accounting, grasping to analyze and digest this subject is a tremendous task for me. Enrolling in the class whereby I was the eldest peer among the student half of my age. Doubling hard, sacrificing my family time, enrolling for another 3 subjects for Australian Institute of Insurance via self-study. Passed 4 with 3 credit another with a distinction in addition working in a public listed insurance company and managing my logistic firm. No Labor, No Gain is my philosophy. Firmly believe the saying learning begins at the womb, ending at the tomb.

What is Loss of Profit Insurance?

Well, in basic terms, loss of profit insurance ensures your business having a decent income when impossible operation at full capacity with declining revenue as you normally would and the subsequent loss of profits

So, essentially, it covers the loss of profit your business will suffer consequences damage from an insured peril. Insured perils typically include fire, floods, hurricanes, storms, earthquakes or volcanic eruption.

The types of events impact where it’s possible to halt your business operations for a period or operate at a lower capacity, typically result in a loss of profit. It ranges from between being a minor blip on your business’s earning potential radar to completely obliterating your business.

Interpreting the coverage

An insurance policy is an evident contract between the insured and the insurer, spells out the right and duties between them, particularly, specifies the circumstances under which the insurer will pay the insured. And if the insured or anyone wants to know the coverage provided by the insurer, by finding the answer in the policy.

Policy couched in legal terms and phrases, not surprisingly few people including agents actually read and understand it. Such a situation judge an advocate of creative insurance marketing should not condone. After all one of the basic selling skills is product knowledge, indeed “Know the product” is one of the commandments practiced religiously by disciples of “creative selling” or “high impact selling”.

Is a problem for Malaysian scenario, not just food for thought?

Agents generally lack in-depth product knowledge that they are selling. The lacking not only blunts one’s competitive edge but also prevents one from reaping opportunities offer. Apparently, one contributing factors is the tangible aspect of the insurance product in the form of a legal document, undoubted hard read and understand due to the lengthy sentence full of technical jargon words. Both the insured and the agent, gratefully, they could spare the effort to read the policy. Another reason, many insureds show little interest in the exact coverage offered under such policy until they come to a crunch when a claim arises. Such apathy coupled the incompetence of many agents to explain the policy coverage fluently resulting in unjustified criticism that insurance product hides in a black box and you probably won’t know what is inside until there is a claim.

Loss of profit, what to cover in my next coming post?

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Life insurance claims nursing tutor silences husband

Published September 13, 2017July 13, 2017 by jamin

Love is blind, life insurance claims nursing tutor silences husband perpetually for debt settling, happening in our neighboring a land of smile. Cool-blooded nursing tutor silenced her 6 months, husband, a grisly horror life insurance claim due to extravaganza compulsive buying branded bag and customized designer shoe. It is un unjust society where the murder had scot-free to another nation by bribing the concerned authority, a criminal proof plan. Love at sight meeting for this metrosexual couple at a posh hotel lobby, promptly married within a month. It ended with a most unnoticed traceable tragedy. Devil with an Angel dressing, let us be alert and aware such white- collar culprit.

Love at first sight marriage

King and Queen of the day, after the grand and blissful celebration on a luxury yacht, cruising along the city main river with all colleagues, 14 days overseas honeymoon follow suit, envy by many.

The dust has settled and back to their normal lifestyle. A faithful wife to her husband by night, a diligent nurse at the hospital by day, with her loving and career, minded spouse. She prepared the breakfast and cooking their meal happily together, a good neighbor in their gated community suburban residences. The 29 years old wife loved shopping during the weekend, having a soft spot for bag and shoe with her spouse in tow with bags of victory good. Born with a silver spoon, finally, her flamboyant life bares the true color to her husband, often ending with gruesome quarreling.

Dead

Her spouse did not rise up after she finished preparing his breakfast before off to the bank at 7.30 a.m. daily. Lying motionless on the king-side bed, she confirmed that her loving hubby dies of naturally dead at the age of 32, subsequently, not suspicious case, no need for a postmortem.

Exorbitant Claim

Instantly, after the funeral over, she went straight to the insurer filing a claim of her late husband life policy, as she was the main beneficiary. $ 1 million exorbitant sums insured for a young bank manager arose of a doubtful claim as the policy inception date less than a year. The insurer called a team of expert to handle such a huge quantum of claim collaborating with the bank and the insurance agent and a famed pathologist.

Confirmed by the agent the nurse approached him to have a policy on the life of her husband. Over the moon, the agent let her filled up all the proposal form and duly signed by the insured, payment with her own credit card.

I let my hand handle this fraud claim when the insurance company requesting to solve this mysterious claim. In the proposal form for a large inquiry for a lump sum insured, she wrote 8 years of marriage which later by the registrar of marriage clarifying the marriage of 6 months. The forensic document analysis had verified that she fabricated her husband signature.

The final verdict

Cremation of corpse did not deter the finding cyanide toxin from the ash of her late husband by a forensic pathologist. Neighbor provision shop she frequents saying she daily buying fresh cassava leaf to make a drink for her husband in the morning. Coupling the smoking habit like a chimney stressful job as fund manager of a foreign bank, indeed a low torturing poison death to him. The final verdict he died of consuming cassava leaf juice blended with some tobacco leaves accumulates of cyanide toxin in his body.

Compulsive Spender

The insurer checked with the credit card company about the spending behavior revealing a compulsive spender weekly on her bag and shoes amounting $1500 a month. Earning $1200 a month, she indeed grossly overspent, thus there is a saying woman complaining not having enough shoe to wear, never enough filling up her wardrobe.

Knowing that she failed to claim the insurance money, she escaped to other nation by bribing those corrupted officer concerned. A sobbing true story the downfall of prominent foreign Ivy graduated nursing tutor and a young innocent bank manager had gone forever due to the compulsive buying behavior.

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Earthquake and Volcanic Eruption property coverage

Published July 23, 2017July 7, 2017 by jamin

The Earthquake and Volcanic Eruption property coverage under in the Fire Insurance for Malaysian. Without any apparent warning sign, a magnitude size of 6.00 on 5th June 2015 erupted at Mt Kinabalu had rocked the nation off guard. The Sabah earthquake, not only devoured 18 life but brought masses destruction to the infrastructure and building with estimated total damage to US$2.84 billion. Consequently, we are no longer living the free earthquake zone. Malaysian starts to realize and the urgent need to have the earthquake and volcanic eruption for the house or commercial property.

The basic Earthquake and Volcano Eruption Clause

All kinds of damages including those arising directly or indirectly out of earthquakes,
tsunami or volcano eruptions including fire, explosion, landslide, and land collapse including the foundations and retaining walls in the cover.

Additional Covered Causes Of Loss

The following 4 items to cover the loss due the cause of

Earthquake.

The Volcanic Eruption means eruption,
explosion or effusion of a volcano.

Any Sprinkler Leakage resulting from Earthquake.

The Sprinkler Leakage resulting from Volcanic
Eruption. Volcanic Eruption means the
eruption, explosion or effusion of a volcano.

All Earthquake shocks or Volcanic Eruptions
concurrently occurrence within 168-hour period will constitute a single Earthquake or Volcanic Eruption.
The expiration of this policy will not reduce
the 168-hour period.

Exclusion clause

The insurer shall not liable for any damage arising out
of the loss of insured items during fire and explosion caused by earthquakes or volcano.

Deductible:

Insurers are liable for damages in excess of Total Loss occurrence in 72 hours the period in damages caused by earthquake and volcano eruptions excluding fire.

The concrete building will attract higher deduction in comparing with a wooden structure as the former razes to the ground completely. Nevertheless, it is unusual to have an excess of $50 000 for any claim loss unless you can prove to the underwriter that building will build to earthquake resistance proof like in Japan. Sad to say that Malaysian government lukewarm attitude, sitting on the comfort zone has not acquired such enforcement skill.

Premium Rate: 0.010%

If you are insuring your commercial building for a sum insured of $2 million, thus, the affordable premium is $200 per year. Why saves a penny now, spending a fortune later to reconstruct your sweet home later on?

Important to have this clause

Occasionally occurrence tremor on the Peninsular Malaysia hailing from large earthquakes in the Sumatran plate
margin. The highest observation recorded VI on
the Modified Mercalli (MM) scale. No exception to East Malaysia with the localized earthquake rampages on properties damage and human casualties.
The peak VII on MM scale intensity earthquake on the Southern Philippine and in the Straits of Macassar, the Sulu, and the Celebes Sea had spilled over the Sarawak and Sabah.
The earthquake occurs, the magnitude size is not a contributing factor for asunder destruction, but the population density and fire as a secondary event.

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